Booming rental income in Phoenix expected to slow
Sep 15, 2015, 7:37 AM
(AP Photo/Mel Evans)
(AP Photo/Mel Evans)
What goes up, must eventually level off, so say those keeping a close watch on the rental market in Phoenix and other parts of the country.
It’s a good time to be an investor in rental property with surging costs and low vacancy rates. But with the supply of apartments rising, and renters looking to buy as the economy improves, investors shouldn’t expect those soaring rental incomes to continue for much longer.
Tina Tamboer of “The Cromford Report” told KTAR’s That Real Estate Show the high cost of rent is forcing renters to take a closer look at putting money into property they can call their own.
“If you’re actually trying to control your monthly income, renting is probably not the best idea for you,” she said. “If you’re able to qualify, if you really want to fix your monthly expenses, get a 30-year fixed mortgage rate.”
Tamboer added the increase in average rent per month per square foot across the greater Phoenix area has accelerated more over the past two years than it did between 2000-2013.
“Rent is now the one thing in the American economy that is rising faster than anything else,” she said.
Published as a contributor for Forbes, Lawrence Yun, the chief economist of the National Association of Realtors, offered a number of reasons for why we should expect a tapering off of soaring rental income.
Yun pointed out that construction activity on apartments is already above the historical norm and that steady job growth, along with falling debt levels (outside of student loans) should help renters improve their credit scores and put them in a better position to buy homes.
Yun also made note of so-called boomerang buyers re-entering the housing market after foreclosures and short sales forced many into rentals during the housing crisis.
He emphasized that while there may still be room for rental income growth for another year or two, we should also expect a slowdown in rental housing and rental income in the not-too-distant future.
Join Realtor Diane Brennan for That Real Estate Show Sundays at 8 a.m. on KTAR News 92.3 FM.
